Oppenheimer analyst Brian Nagel took an ax to his price target on J.C. Penney Co. Tuesday, slashing it to $9 from $15 as he advises investors to steer clear of the stock at current levels.

“Many clients are now asking if it’s time to speculate on JCP shares,” he wrote. “Under the leadership of new CEO Mike Ullman, JCP is making progress, but trends at the chain are likely to remain challenged, and with no clear floor for shares, we advise clients to remain on the sidelines.”

Shares recently fell 0.2% to $8.79. The stock is down about 50% over the past three months and last week hit a 13-year low.

Shares were also hit after Goldman’s debt analysts offered a sour view of Penney’s prospects,and said the company could be forced to borrow more money. The report pushed up the cost of insuring Penney’s bonds against default and raised concerns among suppliers.

On Tuesday, Mr. Nagel lowered his third-quarter earnings forecast to a loss of $1.96 a share, compared to an earlier estimate of a loss of $1.63 a share.

“We recently visited a number of JCP stores and found still aggressive price promotions across departments,” he says. “This suggests a still muted consumer response to new offerings and portends ongoing margin weakness at the chain.”

An environment with heavy discounting and aggressive promotions “renders an already challenged JCP turnaround all the more difficult,” he says.

“JCP is now an ‘emotional stock,’” Mr. Nagel says. “We see no clear floor for shares so long as trends at the chain remain weak.”